Moody's Talks - Inside Economics Tuesday Twist
Dec 16, 2025
Dante DeAntonio, Senior Director of Economic Research at Moody's Analytics, dives into the recent employment report revealing a stagnating labor market. The discussion highlights the dual-month payroll data due to a government shutdown and its impacts. They dissect rising unemployment, potential recession probabilities, and wage growth concerns amidst productivity claims. The panel also debates how AI may reshape entry-level jobs, and the implications of weak retail sales on consumer spending. It's a gripping look at economic indicators and their far-reaching effects.
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SOM Rule Signals Recession Risk
- The SOM rule triggers when the three-month unemployment average rises by 0.5 percentage points from its yearly low, and it could be triggered if unemployment remains at 4.6%.
- Historically, hitting this threshold often aligns with being already in recession.
Panel Sees Elevated Recession Odds
- The panel assigns roughly a 40–45% probability of recession in the next year, higher than consensus, citing weak trends across payrolls, household survey, and spending.
- Shandor Witcher's ML-based leading indicator also signals similar recession probability (~41.5%).
Supply, Tariffs, And AI Could Converge
- Mark highlights supply constraints from immigration policy reducing labor supply and demand-side hits from tariffs and AI-driven productivity as joint recession drivers.
- Dante and Cristian agree AI's initial job effects are modest but could amplify job declines if productivity gains concentrate narrowly.